Extended warranties can be a life saver, or something you find you never needed to begin with. Whether or not you should buy an extended warranty on a used car is a question that many people think about, but there's no true right or wrong answer – it all comes down to peace of mind.

What Is an Extended Warranty?

Should I Buy an Extended Warranty on a Used Car?An extended warranty, also called a service contract, is often offered by a dealer when you finance a used vehicle. Extended warranty coverage allows you to take your car in for service, often at the dealership or an authorized service center, without having to pay the entire bill out of pocket. Warranties come with a cost that is often rolled into your financing package to make them more affordable.

With an extended warranty, you get the peace of mind that if something goes wrong with the used vehicle you're buying, you can bring it in for service without having to shell out hundreds or thousands of dollars for service – assuming that the issue is covered by the warranty. Most warranties have certain exclusions on parts and systems, so make sure you know all the details before you decide to add one onto your contract.

Buying Reliability

Knowing what to look for in a used car can help you determine whether or not you need to get an extended warranty. Many people are looking for an affordable, reliable used vehicle that holds its value, such as a Toyota, Honda, or Subaru. Regardless of the make or model you choose, you should always have used cars inspected by a certified mechanic before you sign on the dotted line.

But there's never a guarantee for how long a used vehicle or its parts are going to hold up. An extended warranty can give you the peace of mind that any car owner wants. Hopefully your vehicle won't have any major issues, but if it does, extended warranty coverage is going to be nice to have.

The Pros and Cons of Extended Warranties

To truly know if getting a service contract is right for you, it's going to come down to how much it costs verses how much any potential repairs might cost without the coverage. Let's look at some pros and cons.

Reasons to get an extended warranty:

  • Peace of mind – This is the number one reason people usually opt for service contracts. It's better to have coverage and not need it than to need coverage and not have it.
  • Customizable coverage – In some cases, you're able to tailor your warranty coverage to what you need. This can be a big plus if there are known issues that sometimes occur in the make or model of car you're financing. You can choose a warranty plan that's likely to cover what you need the most.
  • No hassle – Having an extended warranty sold by a dealer means that the cost can often be rolled into your loan. If this is the case, the dealership takes care of the paperwork and you don't have to worry about the hassle of paying a separate bill each month. Also, you can typically take the vehicle right to the dealer you purchased it from for service.

Cons to getting a service contract:

  • Increased cost to finance – It's more convenient when the cost of your service contract is rolled into your loan, but it also increases the overall cost. The increased interest charges might be worth paying, unless there's any remaining coverage under the original manufacturer warranty. You usually have until the end of that coverage to add a manufacturer-backed service contract.
  • Not all services are covered – Sometimes, there are exclusions on the repairs that can be done under a warranty. In fact, there are typically several types of extended warranties that may or may not be available on the used car you're financing. Be sure to know what's covered and what's not under the extended warranty you're buying.
  • You may not need the coverage – As is the case with most things mechanical, you hope you never need to use the coverage you're paying for. If your vehicle is reliable and you always keep up with regular maintenance and service, you may not need to use your extended warranty, which means you're only paying for the peace of mind.

Let's face it, whether you're getting an extended warranty because of the reputation of the make or model you're financing or because it gives you the peace of mind knowing you're covered is going to depend on your situation.

Need a Vehicle before Worrying about Warranties?

If you're struggling with poor credit and just need a car before you worry about whether or not you should buy an extended warranty on a used vehicle, you have options.

At Auto Credit Express, we've been helping people get connected to local dealerships for over 20 years. These dealers work with the lenders you need to get an auto loan whether you have good credit, bad credit, or no credit at all!

What are you waiting for? Simply fill out our hassle- and obligation-free car loan request form, and we'll get to work matching you with a local dealership from our nationwide network of special finance dealers.